The year 2024 has seen a significant uptick in global insured losses, which have now surpassed $100 billion, according to reports from Gallagher Re. These losses, although not driven by major catastrophes, are primarily the result of smaller, more frequent natural disasters—also referred to as "non-peak perils"—such as thunderstorms, floods, and wildfires. These events contributed to 76% of insured losses, underscoring the changing landscape of risk management in the face of climate change.
Smaller Disasters, Bigger Impact
Preliminary data for the first three quarters of 2024 revealed that global economic losses from natural catastrophes amounted to $280 billion. Of that, insured losses hit $108 billion, exceeding the 10-year average by 5%. This increase in insured losses, despite economic losses being slightly below the 10-year average of $309 billion, highlights how smaller-scale events—those causing losses of $2 billion or less—are making a considerable impact. Gallagher Re’s report attributes much of this to non-peak perils, which have been responsible for 68% of economic losses and are particularly prevalent in regions with high insurance penetration.
Climate Change and Rising Temperatures
2024 is on track to become the warmest year on record. Global land and ocean temperatures for the first nine months have been the highest ever recorded, according to Gallagher Re. This warming trend is amplifying the severity and frequency of natural disasters, which are now hitting non-traditional markets harder than ever before. For instance, weather and climate-related disasters, excluding earthquakes, accounted for $264 billion of economic losses through the first three quarters, marking the ninth consecutive year in which these losses have exceeded $200 billion.
Gallagher Re has noted that a total of 51 separate events each resulted in over $1 billion in economic losses by September 2024—well above the 10-year average of 45 such events. The majority of these were driven by floods, tropical cyclones, and severe convective storms (SCS), collectively making up 85% of global economic losses in 2024.
The US and Global Economic Impacts
Regionally, the United States bore the brunt of disaster costs in 2024, with $128 billion in economic losses, driven largely by SCS, tropical cyclones, and floods. In contrast, Asia recorded $73 billion in disaster costs—below the regional average—while other areas like North America (excluding the US and Mexico) and the Middle East experienced above-average losses. Europe, Latin America, Africa, and Oceania saw below-average losses for the year so far, according to Gallagher Re.
A standout event in 2024 was Hurricane Helene, which was one of 13 natural disasters to cause economic losses exceeding $5 billion. In addition to Helene, major events like seasonal floods in China, Storm Boris (Anett) in Europe, and Typhoon Yagi in Asia pushed the tally of billion-dollar disasters higher than the decadal average.
Munich Re’s Insights: Climate-Driven Losses Surge
Complementing Gallagher Re’s findings, Munich Re reported that global natural catastrophe losses in the first half of 2024 totaled $120 billion, with insured losses at $62 billion. The report highlights the role of rising temperatures, noting that from January to June 2024, global temperatures were 1.5°C higher than pre-industrial levels. This climate-driven warming has contributed to escalating natural disaster losses, particularly in Africa, where floods in East Africa during March and April caused significant damage.
Munich Re stresses that 68% of the world's economic and insured losses were caused by non-peak perils, echoing Gallagher Re's findings. Furthermore, Munich Re’s survey of South African businesses revealed that 86% of respondents were concerned about climate change's impact on their operations, though cost remains a major barrier to preventive action.
Preparing for a Climate-Risk Future
Both Gallagher Re and Munich Re underscore the need for insurers and governments to adapt to the increasing frequency and severity of climate-related disasters. Munich Re advocates for more robust data intelligence and portfolio steering to help insurers better manage climate risks. As weather events grow more extreme, there is also a call for improved risk mitigation efforts and more sophisticated pricing models that reflect the evolving nature of natural catastrophe exposure.
While climate change is a key driver of this trend, growth in urban areas and other economic developments are also contributing to the rising cost of natural disasters. The challenge for insurers now is not only to adjust their coverage and pricing strategies but also to collaborate with policymakers to better protect communities and economies from the growing threat of climate-related risks.
Looking Ahead
As 2024 progresses, experts are keeping a close watch on the Atlantic hurricane season, which has already seen five landfalls in the US, though it has been less active than originally anticipated. With conditions expected to remain favorable for storms through November, the insurance industry must remain vigilant as further losses could still emerge.
This surge in smaller but frequent natural disasters demonstrates how climate change is reshaping the insurance landscape, making it essential for insurers to innovate and prepare for an increasingly uncertain future.
Sources:
Gallagher Re: 2024 Natural Catastrophe Report
Munich Re: H1 2024 Global Losses Analysis
#ClimateChange, #NaturalDisasters, #InsuranceLosses, #GlobalWarming, #NonPeakPerils, #FloodDamage, #SevereStorms, #CatastropheRisk, #InsuredLosses, #DisasterPreparedness
Comments